New NYC Financial Counseling Plan Could Help Victims Take First Step toward Financial Independence

Posted on: Wednesday, December 7, 2011

Keywords: Safe Horizon, domestic violence, Liz Roberts, Wall Street Journal, financial counseling, money planning, New York City, NYC Department of Consumer Affairs

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The Wall Street Journal spoke with Chief Program Officer Liz Roberts to discuss the benefits of a new plan by the Bloomberg administration which will offer financial counseling to individuals receiving help from social service agencies.

City Now Offering Financial Counsel

Jeremy Olshan

December 6, 2011

In post-recession New York, financial counselors have emerged as the city's newest breed of social workers.

Advice on how to get out of debt hasn't traditionally been part of city-run programs for domestic-violence victims, former prison inmates or those facing foreclosure. But money troubles are often at the root of those ordeals, so city officials have moved to pair interventions with financial counseling.

"Financial instability runs through all these clients," said New York City Consumer Affairs Commissioner Jonathan Mintz, who is spearheading the effort. "Sometimes it is what gets them in trouble," he said, "and sometimes it's why intervention doesn't always take."

The Bloomberg administration is set to expand what has been a privately funded pilot program next month, putting $2.4 million behind an experiment paid for by the nonprofit Mayor's Fund.

The four-year trial included 16 financial counselors, reached more than 13,000 New Yorkers and helped pay down $6.3 million in personal debt, according to the Department of Consumer Affairs.

The program is designed to overcome feelings of shame among some financially troubled New Yorkers at risk of toppling into more severe crises.

Margarita Mora, 52 years old, said she had been too embarrassed by the foreclosure proceedings against her to seek help. "I didn't talk to anyone about it...," she said. "Many nights I couldn't sleep, I'd wake up in sweats. There were creditors calling me at all sorts of hours of the night."

The divorced mother manages a hospital food program and carries more than $20,000 in credit card debt, among other bills. Were it not for the financial counselor, Ms. Mora said she believes she would have lost her house in Brooklyn's Bushwick section earlier this year.

"I knew I was in a jam, but you don't see the whole picture until someone sits down with you and goes through it piece by piece," she said.

In monthly sessions with financial counselor Irene Fung, to whom she was referred by a judge during a foreclosure hearing, Ms. Mora prioritized credit card payments and reduced her housing costs through mortgage modification.

The counselors in the program are not social workers. Ms. Fung completed a certification course through the City University of New York before becoming a sort of financial therapist.

"It's very emotional," she said of her relationship with clients. "The issue often isn't financial literacy—people know how and why they got into a situation. But that knowledge in itself is only one component. It's my job to complement that by coming up with a plan of action."

Counselors might help a battered spouse plan for financial independence or show a homeless person how to open up a bank account and establish a credit history, according to a city report outlining the program.

Mr. Mintz said that dispensing financial advice to those already receiving social services staves off relapses and eventually pays for itself. "We call it the supervitamin effect," he said. "Take domestic violence: The average woman goes back to an abusive situation seven times, and the primary reason is because of finances."

Liz Roberts, chief program officer for Safe Horizon, a local nonprofit that assists victims of domestic violence, sees financial counseling as a major need of her clients. "Since it's the abuser who often really controls the finances, victims sometimes really need to learn the very basic skills of managing household finances," she said.

The Bloomberg administration views the emphasis on financial counseling as akin to its efforts to ban smoking in public spaces and slap calorie counts on fast-food menus.

"Just as complete nutrition is the first step to good health, a stable financial foundation is a first step to fighting poverty," said a report on the program by Consumer Affairs officials.

"This was not a traditional role of government—nobody was doing this," said Deputy Mayor Linda Gibbs.

The idea grew out of the Financial Empowerment Centers the city created in 2006 to offer one-on-one sessions with counselors to anyone in need.

Mr. Mintz says he experienced an "aha moment" when he realized that traditional social services could be expanded to include financial counselors.

"They did not have the resources and training to provide financial counseling, and you can really steer someone wrong with well-meaning but misguided advice," he said.

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